Texas has collected $11 million since a strip club fee became effective a year ago.
However, none of the funds has been used for intended causes, such as health insurance for low-income residents and programs aimed to help sexual assault victims.
A state district judge axed the fee on grounds it violates the First Amendment by singling out business activity, namely nude erotic dancing that's protected, even if unpopular.
Wednesday, Texas Solicitor General James Ho argued before the Third Court of Appeals there's nothing wrong with a modest fee for these legal environments. The three-judge panel did not issue a ruling.
If the state loses the battle, all money would be returned to the clubs.
